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Discussions on what constitutes a “fair” (or just) price are quite old. Classical market liberals will typically classify a fair price as any price that is voluntarily agreed upon by the parties in an exchange. That’s all well and good, but I wonder how useful the concept of “fair price” is. First, a bit of .. MORE
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Economic Theory
Each semester that I teach Principles of Microeconomics, I have some variation of this question on my exams: “Joe works at the local supermarket. One day, he says to you: ‘On Monday, we were selling oranges for $0.75 each and we sold 200 that day. On Friday, oranges were $1.00 and we sold 400 that .. MORE
Price Theory
Question: The Texas Minimum Construction Standards require that all plumbing fixtures be WaterSense certified. Examples of requirements under these standards include low-flow faucets, shower heads, and toilets. Suppose, for the sake of argument, that before the requirement for low-flow toilets went into effect, installing a normal-flow toilet cost $250. Suppose also that installing a low-flow .. MORE
Moral Reasoning
In the NFL offseason, star running back Saquon Barkley signed a $40 million contract extension with the Philadelphia Eagles. Make no mistake, he earned it after rushing for 2,005 yards in the regular season and helping to bring another Lombardi Trophy to Philadelphia. I’m not alone in thinking this. As one sports writer put the .. MORE
Sam's Links
We’d like to welcome a new voice here at Econlib, Sam Enright. Sam works on innovation policy at Progress Ireland, an independent policy think tank in Dublin, and runs a publication called The Fitzwilliam. Most relevant to us, on his personal blog, he writes a popular link roundup, in which he gives short commentary on .. MORE
Economic Education
When I first started teaching, David Henderson gave me some advice: to be open about who I am regarding my economic philosophy. At the beginning of class (and several other times throughout), I mention that I am a classical liberal—a free-market economist who argues that individuals rather than governments are best suited to deal with .. MORE
Economic Theory
“Expert failure” is clearly having a moment. Pollsters, Wall Street analysts, tech futurists… all are facing demands to reckon with getting it wrong. Economics, though, seems to be getting special attention. Lately, this has metastasized into Orweillian skepticism of government data itself. It’s one thing to argue that economists have misread numbers. It’s quite another .. MORE
Moral Reasoning
In the NFL offseason, star running back Saquon Barkley signed a $40 million contract extension with the Philadelphia Eagles. Make no mistake, he earned it after rushing for 2,005 yards in the regular season and helping to bring another Lombardi Trophy to Philadelphia. I’m not alone in thinking this. As one sports writer put the .. MORE
Sam's Links
We’d like to welcome a new voice here at Econlib, Sam Enright. Sam works on innovation policy at Progress Ireland, an independent policy think tank in Dublin, and runs a publication called The Fitzwilliam. Most relevant to us, on his personal blog, he writes a popular link roundup, in which he gives short commentary on .. MORE
Economic History
In the early 20th century, America was buzzing with Progressive Era reforms aimed at taming the excesses of industrialization. One landmark was the Pure Food and Drugs Act of 1906, hailed as a victory for consumer safety. It banned poisonous ingredients in food and drink, required accurate labeling, and cracked down on imitations. But when .. MORE
Human beings are inherently pro-social creatures. Aristotle went so far as to refer to us as political animals, driven by our nature to create associations that culminate in the broader community of the polis. And our capacity for reciprocity, trust, and cooperation has deep evolutionary origins. These big brains of ours developed, in part, to .. MORE
Book Review of What Went Wrong with Capitalism? by Ruchir Sharma.1 Capitalism has a “Pretty Pig” problem. The reference is to a state fair livestock contest, where there is a judging of the beauty of adult swine. There are only two entrants, because adult swine just aren’t pretty. The first pig is brought out, and .. MORE
It is not trite to say that businesses are only as good or as bad as their members. Businesses are, after all, human endeavors, and their success or failure depends on the competence and good will of their members. Yet the assaults on hierarchical firms and market economies, often in the form of philippics that .. MORE
Critics of government budget deficits often argue that deficits are irresponsible and cowardly because the present generation is foisting the bill onto future generations, many of whom have no say in the political decision. This perspective resonates with the man on the street, but many professional economists—such as Paul Krugman and Dean Baker—believe that such .. MORE
Given that both parties have to agree on the price, the price must be fair otherwise both parties would not agree to it. When the price is too high, I don't buy.
Knut P. Heen, October 21